Appkodes Tinder Clone Script with Customisable Solutions.pptx
Tba on sourcing firms for csc roundtable 18 dec 2012 - final ho
1. www.thebeijingaxis.com
Shanghai, 18 December 2012
Sourcing Firms Roundtable
Perspectives from The Beijing Axis on
‘Sourcing Firms’
Kobus van der Wath
Founder and Group Managing Director
The Beijing Axis
kobus@thebeijingaxis.com
China-focused
International Advisory and Procurement
The Beijing Axis 1
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The Beijing Axis 2
The Beijing Axis’ Knowledge & Network Synergies
Beijing Axis
Commodities
• Commodity Marketing
• Commodity Procurement
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Capital
• Transaction Origination
• Corporate Finance
Advisory
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Procurement
• Comprehensive
Procurement Solutions
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Strategy
• Strategy Formulation
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• Founded in 2002; has successfully worked with many international and Chinese MNCs
• Operates in four synergistic, cross-border China businesses
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CONSTRUCION, INFRASTRUCTURE and OTHER SERVICES sectors
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out and ‘go global’
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The Beijing Axis - China-focused International Advisory and Procurement
The Beijing Axis 3
There is a dynamic global sourcing timeline. From Western-Europe to North
America in the 50’s, to Japan to NIEs, to new Dragons, to China, to India
and Vietnam … (and next Myanmar, Laos, Cambodia, Africa?)
Global Sourcing Migration (1940-2020)
Source: Dennis Arnold, ‘Textile & Apparel Sourcing: the complexity behind low cost labour in supply chains’
1940 1950 1960 1970 1980 1990 2000 2010 2020
North
America
to Japan
Japan to
HK,
Taiwan,
Singapore
and Korea
SE Asia
and
Mexico/Latin
America
China to
India and
Vietnam
Britain,
W-Europe
to
USA
Indo-China?
Africa?
PNG?
???
Latest LCC Era Next LCC Era
NIE’s
to China,
SE Asia,
and Sri
Lanka
The Beijing Axis 4
• Fragile global markets …
• … but highlights the counter cyclicality to sourcing business as clients look at cost/savings
• China’s cost increases in some cases are reflective of quality improvements but in some cases do constitute a loss
in competitiveness … knowing the difference is key (especially to know ‘what/where’ to source)
• In the last 2-3 years, we have done more complex manufactured products and services in China but simultaneously
branched out more into other low cost sourcing destinations i.e. India and South East Asian economies (usually for
lower-end manufactures)
• More capital projects; more services – this is a niche that requires more technical skill, but its less competitive
• Clients usually need a lot of help if they source complex goods and services. There are many sourcing firms that do
not have the platform, systems, processes, methodology, resources (financial, commercial, technical, logistics),
supplier relationships, etc. to support high-value/high-risk project execution. But is a higher cost model
• Generally need to offer more comprehensive service offering (i.e. abilities in evaluating the changing/evolving
market dynamics; supporting the RFx process; negotiation; contracting; post-PO QA/QC/expediting; logistics
management; etc). Again, higher cost model – requires disciplined business management
Perspectives on the big picture for Sourcing Companies
The Beijing Axis 5
• Sourcing is itself becoming a ‘high cost’ endeavor; must attract, develop, retain talent
• Can be a competitive terrain – need a differentiated positioning. But must co-exist with other players
• There will always be many small sourcing players…but they must find their niche
• Category focus and expertise a must – can be generalist but within a certain cluster of categories. Staff also do not
want to source complex machinery one day and simple paper cups the next day…
• Clients will go direct if you do not add value
• If you only do ‘China sourcing’ you may be challenged by the client – the need is for ‘global sourcing’, but capacity
is a constraint
• Abnormal returns cannot be sustained – build a robust business that can stand test of time. Brand, capacity, value,
etc.
• New players (i.e. EPCM’s, BPO’s, Consultancies) are establishing China/Asia/LCC sourcing positions and project
execution platforms. Some of that could drive sourcing firm acquisitions
Perspectives on the big picture for Sourcing Companies
2. The Beijing Axis 6
Why source from China?
Source: The Beijing Axis Analysis The Beijing Axis 7
What to source from China?
Source: The Beijing Axis Analysis
The Beijing Axis 8
How to source from China?
Source: The Beijing Axis Analysis The Beijing Axis 9
A number of new issues and trends are reshaping the procurement
landscape in China - rising material and labour costs are the major
concerns; quality is increasingly less of a concern (but only for those buyers
that lead in experience)
Major Issues in Terms of Impact on Foreign Companies in China (2009-2010 survey)
Source: Booz & Co. China Manufacturing Competitiveness Study; The Beijing Axis Analysis
0
5
10
15
20
25
30
35
40
45
Material price
increases
Reduced
demand in
home country
Wage
increases
RMB
appreciation
Shortages of
qualified
personnel
Concerns over
IP protection
Poor employee
retention
Sluggish
product launch
readiness
Product quality Difficulties to
find adequate
suppliers
Issue with the third highest impact
Issue with the second highest impact
Issue with the highest impact
No. of Votes
Labour shortage is forcing
companies to boost wages
These used to be a major
concern – not anymore
RMB appreciation and shortage of
qualified personnel are becoming
an issue
IP is becoming less of an
issue
Growing
concerns
Surveyresultsbasedon75respondents
The Beijing Axis 10
Supply chain shifts that underpin industrial development in Asia are still
evolving. Over the past decade, machinery exports’ share as increased
considerably from China
Export Growth of Commodities Produced by Top Asian Countries (USD bn, 2001-2010)
Source: UN Comtrade; The Beijing Axis Analysis
0
600
1,200
1,800
2001 2010
Machinery and Electrical Equipment Textile and Textile Articles Base Metals
Transport Equipment Miscellaneous Manufactured Articles Chemical Products
Others
32%
44%
China
7%
8%
0
100
200
300
2001 2010
0
200
400
600
2001 2010
43%
37%
0
300
600
900
2001 2010
South Korea
India Japan
41%
34%Increasing export
share
Increasing export
share
Decreasing export
share
Decreasing export
share
The Beijing Axis 11
International companies are using various ‘models and sourcing structures’
for China procurement
Various Sourcing Models in China
Note: (1) Also use EPCMs for projects
(3) FIFO: Fly-in-fly out
Source: Various; The Beijing Axis Analysis
No China SourcingNo China Sourcing Sourcing via AgentSourcing via Agent
Fly-in-fly out
(FIFO)
Fly-in-fly out
(FIFO)
via a Procurement
Service Provider
(PSP) (1)
via a Procurement
Service Provider
(PSP) (1)
Office in ChinaOffice in China
• No agents • High use of agents • Medium use of agents • Light use of agents • Very light use
of agents
• No fly-in-fly out (FIFO) • Light FIFO (3) • High FIFO • Medium FIFO • Medium FIFO
• No PSPs • Light use of PSPs • Medium use of PSPs • High use of PSPs • High use of
PSPs
• No Office • No Office • No Office • No Office • Small Office
• Very light use of
agents
• Light FIFO
• Medium use of
PSPs
• Medium Office
• Very light use of
agents
• Light FIFO
• Light use of
PSPs
• Large Office
Small Medium Large
Level of Engagement and
Commitment
PrimaryandSecondaryChannels